Overview
Apple is an American company that specializes in consumer electronics, computer software, and online services. Apple is the largest information technology company by revenue. Apple was founded on April 1, 1976, in Los Altos, CA. The 3 founders were Steve Jobs, Steve Wozniak, and Ronald Wayne. The current CEO of Apple is Tim Cook. Apple recently reached a $1 trillion valuation in 2018, making it the first US company to reach this valuation. Apple has provided consistent gains relative to the S&P 500 for years now, and many still believe it can grow in the future. It's the most popular product and what kickstarted Apple's success is the iPhone. Apple is known for its attention to detail and its user-friendly user interface. However, there is a significant amount
of competition to Apple which brings the question if Apple will be successful in the future.
Business Lines
Apple's revenue mainly comes from 5 product categories: iPhone, Mac, iPad, Wearables and home accessories, and services.
iPhone - 46.63%
Mac - 11.01%
iPad - 9.9%
Wearables and home accessories - 10.54%
Services - 21.03%
iPhone - Apple's main source of revenue comes from the iPhone. The iPhone has consistently been one of the most popular phones in the industry. Many love and admire the simplicity of the user interface, and are reluctant to switch phones.
Mac - Apple's computer business is made up of the Mac. This includes its Macbook laptop and its iMac desktop computers. The Mac is on the expensive side compared to their competition
iPad - Apple launched the first iPad in 2010. It soon became the most successful product in its industry. Although there is less demand for tablets, Apple continues to sell iPads every year.
Wearables, Home, and Accessories - This line of business is made up of devices such as Airpods, Apple Watch, and HomePods. This segment contributes to a chunk of Apple's revenues and is a significant part of the company.
Services - This segment is primarily made by the App Store and Apple Music. Other services include AppleCare, Apple Pay, iCloud store services, AppleCare warranties, and subscriptions. This business line is the second biggest revenue-wise for Apple.
($millions of USD)
Year201620172018201920202021Revenue$215,369$229,234$265,595$260,174$274,515$365,817
Revenues have been increasing at a consistent rate over the last 5 years, and has increased a significant amount since 2016. Additionally, there has been a spike in revenues in the last year.
Apple's main competitors include: Twitter, Samsung, Sony, IBM, Microsoft, Dell, Acer, and more.
Apple’s biggest competitor in terms of smartphones is Android. Apple is dominant in certain areas, while Android is more used in others. For example, Android is predominantly in areas like China and India. However, Apple is dominant in areas like Japan and the US. This has to do with a lot of the price and affordability of the price of each phone. Additionally, Android offers a variety of different phones from premium smartphones, to a cheaper and more affordable phone. With Apple having one brand which is the iPhone, it makes it a bit harder to market their phone to a variety of demographics.
Market share(smartphones)
Year201620172018201920202021Percentage17.9%17.9%15.8%17.2%20.8%23%
The market share of Apple's smartphones(iPhone) is increasing every year. As iPhone being their biggest product, and bringing them the most revenue, this is great to see from an investors point of view. With the market share growing, more iPhones are being sold resulting in more money being brought in. Some of the risk that Apple faces is that if iPhone’s market share decreases, then many of their product’s market share may also plummet. Apple’s products are all interconnected with the iPhone. What this means is that a lot of
Market share(Mac OS)
Year201620172018201920202021(of november)Percentage7.17%9.02%10.65%9.15%9.52%7.31%
The market share of Mac has gone up and down over the last 6 years. The market share was the highest in 2018 at 10.65%, but started to decrease. Its biggest competitor is Windows who is taking most of the market share. These are the 2 main competitors in the computer business.
I think the iphone sales will grow because of the stickiness of the product. We have seen other phones with a cheaper price, and more features, however, the market share has continued to grow for the iPhone. However, there are areas in the world where the iPhone sales aren't growing. These places include most of Asia, Africa, Indonesia, Iran, and Turkey. These areas are controlled by Android with more than 85% of market share. People have grown up with the iPhone, and will continue to keep purchasing iPhones as long as the basic necessities are produced for a reasonable price.
Summary
I would like to invest in Apple. There are pros and cons to investing in any company, however, Apples pros overpower the cons. The revenues are growing at a fast rate for each product, and their iPhone seems to be taking the market by storm. The iPhone market share is almost ¼ for all smartphones. It has increased by 5% in the last 5 years alone. Additionally, they have other products that generate revenue as well. Even though 47% of their revenues come from iPhone, the other 53% of the revenues are spread upon 4 products: iPad, Mac, Services, Wearables, Home, and accessories.
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